Thursday, March 29, 2012

Farming has taken an upturn in recent years. So why are the old farmers so nervous? There have been boom times before. In the late teens and early 1920's, there were years of prosperity and modernization on farms.

Again in the 1970's when we were young, goofy and living off the farm, there was a time of high prices, increasing land values, and money to update machinery and buildings on farms.

Yesterday I explained the price we pay to produce a crop. It is termed "the cost of production." As production of bushels increases, so does the cost per acre of production. The good times are important, but old farmers believe things will come back down, as they always have.

Here are a few additional things to consider:

High farm land values aren't always of benefit to farmers and farms. Increasing values makes it more difficult for farmers to purchase land. The land may not yield a return on investment. Old farmers have lived through it.Cows need acres of land for grazing. Room to graze makes for healthy cows, easier calving, healthier calves. Old ranchers would like to continue.

Historically farmers do not make money every year.

Grandpa Sonny's rule of thumb is this:

In ten years of farming you will make money twice, you will lose money twice, and you will be up or down a little six times.

Old farmers keep track.

In the dry and dirty 1930's there wasn't a profit to be made in Griggs Dakota. When farms make a profit, old farmers average it out.

As Iris has reminded me, "It doesn't matter how high the price is if there are no bushels to sell on the farm." Old farmers remember.

Farmers can provide exactly what land needs to produce an optimum crop, but the weather and the markets cannot be controlled.

Wednesday, March 28, 2012

It's easy to imagine gold in a ripe wheat field. Explaining the cost of turning wheat seed into a crop of ripe wheat is more complicated.

Her adult life has been spent living off the farm and Iris tells me that she has had many conversations trying to explain that it costs money to raise crops on a farm. She has been surprised at how few really understood.

It is important to understand that food comes to your plate at a cost.

The Cost of Production is similar to the cost of doing business. Most people understand that there is a cost involved in canning, freezing, packaging and shipping food to your grocery store.

Cost of Production is the farmer's cost of producing the raw materials and getting them to market. It is then sold to processors, distributers or overseas markets.

It is the price farmers pay for planting a crop,

Maintaining and enhancing plant health during the growing season.

Through the harvest and sale of the crop.

Here are the basic cost elements for farm production.

Land: Owned or Rented

Machinery: Used for seeding, tillage, application of plant health enhancements, harvesting and transporting.

Buildings: Used for storage and maintenance including bins, sheds, shops.